Understanding the Foreclosure Process: A Guide for Displaced Homeowners and More

FLORIDA FORECLOSURE SURPLUS FUNDS: CAN A FIRST MORTGAGE FILE A CLAIM FOR SURPLUS FUNDS AS A RESULT OF A SUBORDINATE LIENHOLDER’S FORECLOSURE ACTIONS

BY-LAW GROUP

November 25, 2023

Today, we will be discussing a matter that I come across occasionally when representing my clients in the recovery of their surplus funds after a subordinate lienholder’s foreclosure auction of the subject property. First and foremost, Florida Statute 45.032(2) states “[t]here is established a rebuttable legal presumption that the owner of record on the date of the filing of a lis pendens is the person entitled to surplus funds after payment of subordinate lienholders who have timely filed a claim.” Meaning that the “owner of record”, defined by Florida Statute 45.032(1)(a) as “the person or persons who appear to be owners of the property that is the subject of the foreclosure proceeding on the date of the filing of the lis pendens,” is the one that is entitled to filing a claim for the surplus funds that may be available after the foreclosure sale.

Florida Statute 45.032 clearly delineates the order of priority that the surplus funds are to be disbursed with subordinate lienholders, defined by Florida Statute 45.032(1)(b) as “the holder of a subordinate lien shown on the face of the pleadings as an encumbrance on the property,” being first; and then the “owner of record.” In contrast, Florida Statute 45.032 does not mention the rights of a First Mortgage, or superior lienholder, as how they pertain to the filing of a claim for surplus funds; nor does said statute define a superior lienholder as an “owner of record” or “subordinate lienholder.” In fact, in Goetz v. AGB Tampa LLC, 335 So.3d 228, (Fla 2d DCA 2022), the Defendant appealed the trial court’s ruling, in which, the court granted the superior lienholder’s motion to intervene in a subordinate lienholder’s foreclosure action and further ordered that said lienholder be disbursed a portion of the surplus funds held in the court’s registry. The Second District Court of Appeals of Florida determined that “[t]he Bank was neither an owner of record nor a subordinate lienholder…”and it was further opined by the appellate court that the Bank, or superior lienholder, “made no attempt to rebut the statutory presumption in favor of” the Defendant as it pertained to that of Florida Statute 45.032(2). As such, The Second District Court of Appeals of Florida reversed and remanded the trial court’s order granting the Bank’s, or superior lienholder’s, motion “for further proceedings consistent with this opinion.”

Thus, a superior lienholder is not able, or eligible, to file a claim for surplus funds resulting from that of a subordinate lienholder’s foreclosure action. However, it should be noted that a superior lienholder’s right to foreclose is not extinguished by the sale of a property subject to a subordinate lienholder’s foreclosure action. In fact, due to the superior lienholder’s lien being superior to that of a subordinate lien and coming before said lien, it is still legally entitled and/or able to recover the debt owed to it by filing its own foreclosure action to recover said debt.

If you are a former Florida homeowner and have been notified that there are surplus funds available after the Florida foreclosure auction of your property or if your Florida property has been sold at Florida foreclosure auction and would like to know if there are surplus funds available to be claimed; then please give me a call and I will personally give you a free consultation. During our consultation, I will confirm whether there are surplus funds available to be recovered as well as answer any questions that you may have. If there are surplus funds available to be recovered, then I will also provide you with a personalized strategy as to how we can assist you with the recovery of YOUR Florida foreclosure surplus funds.

At US Surplus Funds Recovery LLC., we are well-versed in the Florida statutes governing Florida homeowners’ claims to Florida foreclosure surplus funds and have helped to recover millions of dollars for former Florida homeowners. We represent former homeowners all over the state of Florida, no matter which county they are in, and will work tirelessly to ensure that you receive the Gold Standard in Service.